A profit warning from Homeserve had investors heading for the exit this
morning, with shares in the house repairs and insurance group sliding as
much as 15.7pc.

The FTSE 250 company disclosed that profits both in 2014 and 2015 would miss market expectations, news that sent the group to the bottom of the mid-cap index.

UK customers are expected to fall to 1.9m by March next year, from about 2.25m in 2013, while 300 jobs in Britain would be cut and the value of its warranty business in France would be written-down, Homeserve said. To add to the uncertainty, traders are still waiting for the outcome of an on-going Financial Services Authority investigation into accusations of mis-selling.

“Further UK job losses and a write down of its French warranty business, along with UK margin pressure and the on-going FSA investigation, means an extremely tough ride ahead for investors,” said Panmure Gordon analyst Andy Brown.

Homeserve shares recovered some of there losses by mid-morning but were still trading 7.8pc lower.

While dealers remained cautious as the crisis in Cyprus continued to drag on, action in the wider market was muted, with the FTSE 100 up just two points and the FTSE 250 down 29 points, or 0.2pc.

Nevertheless, oil major BP was in demand and put on 2.7pc after pleasing investors with news of an $8bn share buy-back. But a profit warning from luxury goods retailer Mulberry, down 16.6pc in early trade, dragged on blue-chip peer Burberry, which lost 4.3pc.

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